by For months, I have been confident that Europe would suffer a financial crisis and a depression, as in a real economy catastrophe accompanied by a market crash. It might not be that severe and lasting as 1929, but the breadth would mean there would not be 1987 quick bounceback nor a 2008 derivatives crisis concentrated at the heart of the banking system. Even though that looked like financial near-death experience, the same factors that made it more acute in many respects also made it easier for the officialdom to identify and shore up the key institutions that took hits below the water line.The short version of what follows is things are looking even worse now, and on multiple fronts. And unlike 2007-2008, where the officialdom actually was monitoring the US (and other markets) housing
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
NewDealdemocrat writes March JOLTS report: declines in everything, fortunately including layoffs
NewDealdemocrat writes Manufacturing treads water in April, while real construction spending turned down in March (UPDATE: and heavy truck sales weren’t so great either)
Eric Kramer writes Eric Segall tells us what he really thinks about the Roberts court
Angry Bear writes Supreme Court watchers mollified themselves (and others) with vague promises
For months, I have been confident that Europe would suffer a financial crisis and a depression, as in a real economy catastrophe accompanied by a market crash. It might not be that severe and lasting as 1929, but the breadth would mean there would not be 1987 quick bounceback nor a 2008 derivatives crisis concentrated at the heart of the banking system. Even though that looked like financial near-death experience, the same factors that made it more acute in many respects also made it easier for the officialdom to identify and shore up the key institutions that took hits below the water line.The short version of what follows is things are looking even worse now, and on multiple fronts. And unlike 2007-2008, where the officialdom actually was monitoring the US (and other markets) housing bubble and derivatives implosion and engaging in (not adequate) responses, here top financial and monetary authorities are missing in action as far as these obvious risks are concerned.
I never thought I’d want Bernanke, Paulson, and Geithner back. I was very critical of them at the time, but they look like paragon of competence compared to the likes of Janet Yellen, Kwasi Kwarteng, and Ursula von der Leyen.
Below we’ll discuss the rapidly accelerating real economy crisis, which is exacerbated by central bank tightening as pretty much the only line of defense against inflation that is almost entirely the result of a a multi-fronted supply shock.1 Needless to say, the Fed raising interest rates (which Bernanke recognized as necessary in 2014 to tame bubbly asset prices but then lost his nerve) does nothing to get more chips from China or magically cure Covid-afflicted staffers so they can show up at work. But it will whack all sorts of speculators and financial firms who have wrong-footed their interest rate positions.
And it also seemed apparent that the US would be pulled into the maelstrom, perhaps not as far, but contagion, supply chain dependencies, and the importance of Europe as a customer would assure the US would suffer too....
Add financial crisis to climate change disasters, pandemics (Covid, monkey pox), and WWIII being on.
Naked CapitalismThe Inevitable Financial Crisis
Yves Smith